German prosecutors said on Friday they were discontinuing an investigation into charges of sexual abuse by former Catholic Bishop Walter Mixa, who resigned last month amid claims he had beaten children and misused Church funds.

But the investigation hardened suspicions that the former bishop of Augsburg physically abused other children while head of an orphanage in Schrobenhausen in the 1970s and 1980s.

Last month, Mixa tendered his resignation to Pope Benedict XVI because of persistent allegations that he hit and beat children. Eight people who lived at the home have come forward with claims that he beat them with his fists, a stick and even a carpet beater.

A special Church probe presented on Friday revealed that Mixa once hit a girl so hard she fell against a wall and was unable to stand despite him repeatedly demanding she get up. He would also say things like: "Satan is in you and I will beat him out of you," and "Child of God, take this punishment and repent," while abusing children at the home.

After weeks of flat denials, Mixa admitted in April he could “not rule out a cuff or two around the ear 20 years ago” and added that “I very much regret that today.”

The investigation into activities at the children's home and the charitable foundation running it also highlighted a number of seemingly questionable purchases signed off by Mixa.

These included spending 15,000 Deutsche marks on a Mary icon, DM43,000 on a probably counterfeit Piransi engraving, and DM70,500 on a fancy crucifix. Thousands were also spent on wine.